ASA University BangladeshASA University Bangladesh

Presented by: A.M.M. Mamun-ur-Rashid Farzana Akter Md. Mahamudul Haque Md. Tanvir Morshed

RENATA LIMITED

INTRODUCTION

Ratio Analysis draws an appropriate end to the Introduction to Finance course in ASA University Bangladesh. This course gives a chance to test our theoretical knowledge with the ever demanding professional world. It is the outcome of the first window of the students to the world of bringing the class room knowledge to the real world’s workplace settings carry out the work. In education, certification, counseling, and many other fields, a test or exam (short for examination) is a tool or technique intended to measure students' expression of knowledge, skills and abilities. A standardized test is one that compares the performance of every individual subject with a norm.

Company Profile

It founded in 1972 as a subsidiary of Pfizer Inc.

Its ownership transferred from Pfizer Inc. to local institutions and the general public in 1993.

Company name subsequently changed from Pfizer Laboratories (Bangladesh) Limited to Renata Limited.

Renata Limited, ISO-9001 certified Company and one of the leading Pharmaceutical Conglomerates and market leader of Animal Health in Bangladesh.

  Type of Company    

Listed Public Limited (Dhaka Stock Exchange)

Turnover  : $ 27,938,143Market Capitalization   : $ 42,260,870

OBJECTIVE AND METHODOLOGY

Ensure that a consistent approach is applied to projects.Establish the system within a time limit.Reduce the risks associated with short-cuts.Records accurately the requirements for a system.Monitor the progress of system development.Produce consistent and complete documentation.Indicate any changes which need to be made as early as possible.

Summary ExecutiveRenata Company one of the leading Pharmaceutical Conglomerates and market leader of Animal Health in Bangladesh. We have analyzed on ratio of Reneta Company on the basis of commoncize analysis, we have compared the company’s two years performance (2006&2007) In these two years company’s Acid Test, Average Collection Period, Fixed Assets turnover, Total Assets Turnover, Debt Ratio, Time Interest Earned Ratio, Net Profit Margin, Return on Assets, Return on Equity, Earning Per Share are satisfactory. But Gross Profit and Net Profit are not satisfactory.

are

Sources

Renata Annual Report of 2006 and 2007.Dhaka Stock Exchange.Renata Company Main Office.

Ratio AnalysisRatio AnalysisA technique for evaluating financial statements that expresses the relationship between selected financial statement data.

Liquidity RatioLiquidity ratio measure the short-term ability of the company to pay its maturity obligations and to meet unexpected needs for cash.Profitability RatioMeasure of the degree of success or failure of a given company or division for a given period of time.Activity RatioMeasures of how effectively the company is using the assets employed.Leverage RatioMeasures of the degree of protection for long-term creditors and investors. 

Under Liquidity Ratio:Under Liquidity Ratio:

Current Ratio: A measure used to evaluate a company’s liquidity and short term debt-paying ability; computed by dividing current assets by current liabilities.

  Acid Test Ratio: A measure of a company’s immediate short-term liquidity; computed by dividing the sum of cash, short-term investment and net receivables by current liabilities. 

Under Profitability Ratio:Under Profitability Ratio:

Gross Profit Margin: Measures gross profit generated by each taka of sales.  Net Profit Margin: Measure the percentage of each taka of sales that results in net income; computed by dividing net income by net sales.  Return on Assets/Inventory: An overall measure of profitability; computed by dividing net income by average assets.  Return on Common Stockholder’s Equity: Measures the taka of net income earned for each taka invested by the owners; computed by dividing net income by average common stockholder’s equity.

Under Activity Ratio:Under Activity Ratio:

Average Collection Period: A popular variant of the receivable turnover ratio is to convert it to an average collection period in terms of days.  Assets Turnover: A measure of how efficiently a company uses its assets to generate sales; computed by dividing net sales by average assets.  Inventory Turnover: A measure of the liquidity of inventory; computed by dividing cost of goods sold by average inventory.  Receivable Turnover: A measure of the liquidity of receivables; computed by dividing net credit sales by average net receivables.

Under Leverage Ratio:Under Leverage Ratio:

Debt to Ratio: Measures the percentage of total assets provided by creditors.   Debt to Equity: Measures the percentage of total equity provided by creditors. 

 

RENATA LIMITEDRENATA LIMITED

Two Years Comparative

Ratio Analysis

(2006&2007)

SI Name of the Ratio

2007 2006

1 Current Ratio 1.38 1.49 2 Acid Test Ratio 0.56 0.523 Days Sales

Outstanding27.67 37.09

4 Fixed Asset Turnover Ratio

2.17 2.42

5 Total Asset Turnover Ratio

1.18 1.09

6 Debt. Ratio 0.41 0.457 Time Interest

Earn Ratio9.11 7.73

8 Gross Profit Margin

48.74%

49.25%

9 Net Profit Margin

13.26%

12.56%

10 Return on Asset 15.59%

13.63%

11 Return on Equity

26.29%

24.65%

12 Earning Per Share- Report of condition

348.47

301.04

Final Recommendation

The analyzing of The Renata Company’s financial ratios compare to 2006 and 2007 we find only two weaknesses. Company’s position regarding Current Ratio is decreased in 2007and Gross Profit Margin is decreased in 2007. These are the threat for the company. So company should either increase current assets or reduce current liabilities and cost of good sold. Although these are the threat for the company, dispute of company’s others activities (Acid Test, Average Collection Period, Fixed Assets turnover, Total Assets Turnover, Debt Ratio, Time Interest Earned Ratio, Net Profit Margin, Return on Assets, Return on Equity, Earning Per Share) are satisfactory. After investigation we can see the difference between Gross Profit Margin and Net Profit Margin. Here Gross Profit decreased and Net Profit increased. It indicates, company’s internal control is efficient. Company should try to hold their present position and progress in future.

Thanks You All.Thanks You All.